House prices fall amid interest rate hikes -
interest rate hikes

House prices fall amid interest rate hikes

Data recently released by Halifax shows that house prices across the UK have fallen for the first time since June 2021. The house price fall comes amid rising interest rates, with the Bank of England’s latest rate hike taking the base interest rate up to 1.75% from just 0.25% in December.

The figures show that house prices in the UK fell by 0.1% month-on-month in July, a double whammy for homeowners who may have seen mortgage payments rise due to interest rate hikes while their house price falls. However, despite the house price fall last month, average UK property prices are still 11.8% higher than this time in 2021, which equates to an average increase of £30,000.

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Slowdown on the cards

Industry experts expected the slowdown due to a softening in the property market. While there was a property boom with house prices rocketing during the Covid-19 pandemic, figures suggest the bubble could burst. However, the current drop in house prices is only a small one.

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The drop in property prices means that the average house price in the UK now stands at £293,221 after hitting a record high of £293,586 in June.

Just days before Halifax released these figures, Nationwide published separate data suggesting the property market in the UK was still strong. Nationwide’s figures showed that property prices in the UK had risen by 0.1% month-on-month.

Following the release of the most recent data, Russell Galley, the managing director at Halifax, said, “It’s important to note that house prices remain more than £30,000 higher than this time last year. While we shouldn’t read too much into any single month, especially as the fall is only fractional, a slowdown in annual house price growth has been expected for some time.”


Galley added that there had been a softening of activity in the property market, but there was still some evidence of factors that had been contributing to the buoyancy of the market over the past few years. This included extra money saved during the pandemic and “fundamental changes in how people use their homes”.

He said that property prices in the UK would come under more pressure because the factors that contributed to a buoyant property market would be overtaken by factors like rising interest rates and soaring living costs.

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Reduced purchasing power could further dampen the property market

One estate agent also commented on how reduced purchasing power due to the current economic climate could further dampen the property market.

Nicky Stevenson, managing director of estate agent group Fine & Country, said, “Cheap debt is fast disappearing, and against this backdrop, we can expect to see a dampening effect as purchasing power continues to be eroded. While the housing market and broader economy do not always move in tandem, the recession predicted by the Bank of England is bound to have an effect on growth and consumer confidence.”